Should I buy some stock now?
September 29, 2008 1:25 PM Subscribe
I was wondering if now would be a good time to buy stock in, say, a bank. The theory being buy low and then some years from now, it would be high. I'm talking maybe $1000, such that if I lost it all, while I wouldn't be very happy about it, but it wouldn't break me. I realize you are not a lawyer, or financial analyst, or whatever. I'm looking for any opinion, for or against.
Against, I don't think we're anywhere near the bottom here. Put the $1000 in your mattress (figuratively).
posted by No New Diamonds Please at 1:38 PM on September 29, 2008
posted by No New Diamonds Please at 1:38 PM on September 29, 2008
I was wondering if now would be a good time to buy stock in, say, a bank
The market is down for sure, but nobody knows where the bottom is; and even the "experts" are very likely to be wrong. The market is really fickle...
Also, $1000 doesn't buy much bank stock - I am not sure about the regulations on the US exchanges but usually they don't do trades of under 100 shares, and 100 shares of Bank of America will cost you about $3000 plus the cost of the transaction (~$20-$40).
You could buy an Exchange Traded Fund heavy on financials for $1000 - that would spread out the risk somewhat. If you buy and hold a good stock/fund for years you should make money unless we are seeing a financial event unlike any in history; the key here is not to sell when you hit a rough spot.
posted by Deep Dish at 1:41 PM on September 29, 2008
The market is down for sure, but nobody knows where the bottom is; and even the "experts" are very likely to be wrong. The market is really fickle...
Also, $1000 doesn't buy much bank stock - I am not sure about the regulations on the US exchanges but usually they don't do trades of under 100 shares, and 100 shares of Bank of America will cost you about $3000 plus the cost of the transaction (~$20-$40).
You could buy an Exchange Traded Fund heavy on financials for $1000 - that would spread out the risk somewhat. If you buy and hold a good stock/fund for years you should make money unless we are seeing a financial event unlike any in history; the key here is not to sell when you hit a rough spot.
posted by Deep Dish at 1:41 PM on September 29, 2008
Wait about a week. You'll get a better price.
posted by Class Goat at 1:41 PM on September 29, 2008
posted by Class Goat at 1:41 PM on September 29, 2008
I am not sure about the regulations on the US exchanges but usually they don't do trades of under 100 shares,
Not really true. I regularly trade blocks of 50, and I bought 1 share once (of BRK.B).
posted by smackfu at 1:52 PM on September 29, 2008
Not really true. I regularly trade blocks of 50, and I bought 1 share once (of BRK.B).
posted by smackfu at 1:52 PM on September 29, 2008
It's a reasonable shot to buy now. Certainly the press about banks could hardly be worse and there's plenty of room on the upside. You have to decide if you want to invest in the sector or in a specific bank. If you have a specific bank in mind, based on your analysis of the sector, by all means go for it. If not, perhaps the Fidelity Select fund for the banking sector FSRBX would be a possibility.
posted by richg at 2:18 PM on September 29, 2008 [1 favorite]
posted by richg at 2:18 PM on September 29, 2008 [1 favorite]
Not really true. I regularly trade blocks of 50, and I bought 1 share once (of BRK.B).
Thanks for steering me right.. I was never clear on whether that was a regulation or a convention; I could see how buying one share of Berkshire is probably worth it :)
Anyway, I've finally looked it up - buying less than 100 means you are buying an "odd lot" - this means higher transaction fees and you trade last. I would watch the transaction fees on this purchaseto be sure they aren't eating too much of your $1000, but if you feel the market is right go ahead and buy.
posted by Deep Dish at 2:23 PM on September 29, 2008
Thanks for steering me right.. I was never clear on whether that was a regulation or a convention; I could see how buying one share of Berkshire is probably worth it :)
Anyway, I've finally looked it up - buying less than 100 means you are buying an "odd lot" - this means higher transaction fees and you trade last. I would watch the transaction fees on this purchaseto be sure they aren't eating too much of your $1000, but if you feel the market is right go ahead and buy.
posted by Deep Dish at 2:23 PM on September 29, 2008
A saying has been going around of late to the effect that you shouldn't try to catch a falling knife.
I think some banks are too big to fail, though if they should start to go the market will get spooked royally.
I bought some BAC at 28 quite a while back. I'm up 10% or more. It's risky; it's volatile. But there will be winners and losers. Make sure you can sleep at night, choose wisely and I suspect there are opportunities out there to be had at today's valuations.
posted by sagwalla at 2:47 PM on September 29, 2008
I think some banks are too big to fail, though if they should start to go the market will get spooked royally.
I bought some BAC at 28 quite a while back. I'm up 10% or more. It's risky; it's volatile. But there will be winners and losers. Make sure you can sleep at night, choose wisely and I suspect there are opportunities out there to be had at today's valuations.
posted by sagwalla at 2:47 PM on September 29, 2008
Hmm. You could try buying banks whose management says that they have no exposure to the subprime crisis. Even these banks seem to be a little undervalued. I'm sure you have such banks in the United States, but here in the U.K. we have Standard Chartered (STAN) and HSBC (HSBA). Insurers are also taking a hammering, so I suppose you could try something like AMPH. The management of that company also claims to have no exposure to US mortgage lending.
Bear in mind that few of us on MeFi are the sort of people you ought to take investment advice from. Those who are, probably won't tell you exactly what they're investing in. But if that's understood, then invest away!
posted by I_pity_the_fool at 3:20 PM on September 29, 2008
Bear in mind that few of us on MeFi are the sort of people you ought to take investment advice from. Those who are, probably won't tell you exactly what they're investing in. But if that's understood, then invest away!
posted by I_pity_the_fool at 3:20 PM on September 29, 2008
Against -- wait another year or so.
posted by Asparagirl at 4:13 PM on September 29, 2008
posted by Asparagirl at 4:13 PM on September 29, 2008
Just linked this in the blue, but seems useful here as well:
Smaller Banks Thrive Out of the Fray of Crisis
posted by mediareport at 4:43 PM on September 29, 2008
Smaller Banks Thrive Out of the Fray of Crisis
posted by mediareport at 4:43 PM on September 29, 2008
The biggest financial crisis in seventy years or so is a pretty terrible time for people with no experience in the markets to start investing. In banks.
posted by Jairus at 4:55 PM on September 29, 2008
posted by Jairus at 4:55 PM on September 29, 2008
My two cardinal rules: do your homework, and don't bet money you can't lose. Know that the smartest experts can be wrong, and so can you, but doing your research can illuminate opportunities in any market, including this one. Take a measured risk and give it time to pay off -- you have decent odds if you choose wisely.
posted by Chris4d at 6:02 PM on September 29, 2008
posted by Chris4d at 6:02 PM on September 29, 2008
Just a thought. Maybe instead of investing in 'a bank', split up your $1000 and invest in several different ones. Spread around the risk.
posted by marsha56 at 7:32 PM on September 29, 2008
posted by marsha56 at 7:32 PM on September 29, 2008
If you have money then you can speculate - if you don't have money then you HAVE to speculate ;-)
Honestly? I wouldn't buy now. I don't think we have seen the bottom. I once read that professionals buy when the stock rises and sell when the stock falls, laymen try to do it otherwise around because they think like you. On the other hand, the banks that will survive may not pay much taxes in the future due to the huge write-offs and may do quite well. But which one will survive? The ones that are too big too fail? GS since Warren has invested in them?
Honestly I would not bet on banks now. But I also think about blowing a bit on penny stocks or "semi penny" stocks.
posted by yoyo_nyc at 7:43 PM on September 29, 2008
Honestly? I wouldn't buy now. I don't think we have seen the bottom. I once read that professionals buy when the stock rises and sell when the stock falls, laymen try to do it otherwise around because they think like you. On the other hand, the banks that will survive may not pay much taxes in the future due to the huge write-offs and may do quite well. But which one will survive? The ones that are too big too fail? GS since Warren has invested in them?
Honestly I would not bet on banks now. But I also think about blowing a bit on penny stocks or "semi penny" stocks.
posted by yoyo_nyc at 7:43 PM on September 29, 2008
This thread is closed to new comments.
posted by bluejayk at 1:38 PM on September 29, 2008 [1 favorite]